SUPERMAX posts better Q1FY19 earnings on the back of global glove demand and capacity preparedness

Supermax Corporation Berhad (Supermax or the Company) (BURSA: SUPERMX), a global latex glove and medical healthcare device conglomerate announced its 1st quarter results for the financial period from 1st July 2018 to 30th September 2018. The Group recorded a 17.6% increase in revenue to RM367.0 million compared to the corresponding quarter last year, on the back of increased global sales of its natural rubber and nitrile gloves. The global glove industry continues to grow between 8% to 10% per year with consumption expected to rise to 246 billion pieces of gloves in 2018.

The revenue increase was mainly due to the Group’s preparedness on capacity expansion put in place through its ‘Rebuilding & Replacement’ program carried out since last year. A total installed capacity of 5.6 billion pieces of gloves was added since 2 of its newest plants became fully operational in the October to December period in 2017. This brought the Group’s total installed capacity level to 23.5 billion pieces of gloves per annum, where the additional production output as well as improved operational efficiency from the new high efficiency and high capacity lines commissioned, facilitated to the increased sales orders.

Overall performance for the reporting quarter showed a jump in the Group’s profitability compared to the corresponding quarter last year. EBITDA and PBT rose by 20.8% and 29.6% to RM67.7 million and RM52.7 million respectively. This resulted in an Earnings Per Share (EPS) of 5.48 sen for the reporting quarter.

SUPERMAX IN BUILDING SUSTAINABLE GROWTH

Prospects in Glove Division

A vibrant market coupled with increased capacity to boost both top and bottom lines of the Group’s financial performance. The Group prepares for next phase of expansion.

The global market for disposable gloves remains vibrant for both the natural rubber and nitrile variants. This is mainly driven by various factors including rising healthcare awareness, healthcare reforms mandating its use in the medical and other sectors, and rising consumption from non-traditional users such as the beauty sector and even household users. These positive factors continue to augur well for the Company and the industry as a whole. The Supermax group has been preparing its position to increase capacity and in the 2nd quarter of the last financial year (October – December 2017), the Group had managed to fully commission its 2 newest plants, which had gradually added 5.6 billion pieces to the Group’s total installed capacity. On top of this, it had also embarked on a Rebuilding & Replacement programme in stages since last year, where its plant in Perak which is fully operational since end-September 2018 with annual production capacity of 1.35 billion gloves, now extracts higher production compared to previously. The new increased capacity and improved efficiency will boost both the top and bottom lines of the Group’s financial performance. The Group is now underway in preparing for its next stage of expansion – increase land bank for purpose of capacity expansion. The Group has acquired a piece of land behind its existing cluster of plants in Meru, Klang. Construction works to build its 12th plant on this plot of land started in July 2018. This will further add to the Group’s production capacity when its 1st block (Block A) is completed in the 2nd half of 2019.

The Group has invested over 100 million in developing its contact lens business which continues to make progress. This division has successfully set up and stabilised its production operations over the last few years. Its achievements to date sit on its capabilities to procure the necessary certifications and approvals to produce and bring its products to market globally within a short penetration period. Notably, the Group was able to meet the very stringent requirements of the Japanese medical device authority and had in June 2018 successfully obtained the product license to export contact lenses to Japan which is also the second largest contact lens market in the world. This is the first for a Malaysian contact lens maker. The first batch of contact lenses were recently shipped to Japan on 25 August 2018. Going forward, the Group will continue to work on obtaining the necessary product licences and approvals, expanding its product range and increasing market penetration for its products globally. Earlier this month, the Group launched its US-based own brand of contact lenses in Malaysia known as Aveo Hello, a flagship product of Aveo Vision. This came within months after its introduction in the US market. The Group expects further expansion of its marketing footprint going forward.

Dividends

The Board of Directors of Supermax have proposed an interim single tier dividend of 2.0 sen per share amounting to RM13.1 million to be approved in the upcoming 21st Annual General Meeting. Supermax has to-date paid out total dividends amounting to over RM 350 million since listing in 2000.

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